DEVELOPMENTS in the United States financial world trouble me - due not so much to fears of a deep recession, but the persistent ignorance showcased by top leaders, Wall Street 'wizards' and consumers in general. Have these people gone blind to the various financial fallouts that have plagued them for decades?

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You so smart why aren't you up there? The best talents in Singapore are in government or the GLCs already. Don't kid yourself.

Looks like the $700 billion bailout is failing.

Are you an insurance agent, that too a failed one? You are talking about financial adviser, training, license, etc? What is wrong with you? Unfortunately it is the cheap insurance agents who call themselves financial consultants, life planners, advisers. etc. this is the biggest drawback of singapore financial system. At best these fellows know to force sell a whole life policy; beyond that their knowledge is zero. Why call them financial adviser or consultant?

Kindly note that #4 Eagle_2004 is an imposter who deliberately flames other posters so that they retaliate against me, Eagle2004. Do not fall into his trap.

American style of capitalism : geared to short term result without regard to the consequences on tomorrow, driven by supreme personal greed of what the CEO can take home immediately, almost like defrauding the public shareholders of the banks when they leveraged their banks without limit.....while taking home hundreds of millions....it is a stupid capitalism of free market ending as a flea market

Greed, Lust, Corruption and MM driven desires will bring all deeper into darkness not into the light, isn't it?

What is the solution?

MM and Tony Tan have spoken. Ho Kwon Ping too. PM is smarter, holding.

Do the chieftians in politics, goverments, businesses, religions, science, academics, etc. have the solution?

More so and so obvious, human is in deep madness groping in darkness, isn't it? Why? Putting spirit last instead of putting Spirit First. They are at the extreme ends of both ends of the pole.

Materialism/Capitalism do not mix well with Spirituality. They are opposites as the former drives humans deeper into darkness not into the light. The former also creates the cold and patched hearts of humans when it is overly driven by Greed, Lust, Corruption and MM desires.

Some in religions [not happy with anything American] call this meltdown as retributions falling on the US, isn't it?

Is Ho Kwon Ping's solution able to bring mankind out of the quarmire of darkness? Humankind is like being shot by poison arrows. What is the solution for mankind able to pull out each arrow at a time and how long will it take? Think. Think harder.

Time to change reward system

Tuesday • October 7, 2008
by HO KWON PING

Ten years ago the Asian financial crisis raged like wildfire through the region. Corporates, banks, even governments — one after another collapsed due to imprudent borrowings, poor corporate governance and crony capitalism.

Today, history repeats itself, but halfway around the world. And the fiercest critics then — the Western, and particularly American, banks — are now having to eat their own words. The very institutions which, by self-righteously blocking bailouts of distressed Asian banks, in order to pick them up at fire-sale prices, are now tasting their own medicine.

As the battle between Main Street and Wall Street builds up in America and the rest of the world watches with the transfixed fascination of a deer staring into the headlights of a car about to run it down, it would perhaps be forgivable to indulge in some bitter gloating.

Unfortunately, there isn’t much to gloat about. South-east Asia may have recovered economically from its financial crisis, but it is mired in other, perhaps even more intractable, problems. This region has not only utterly failed to live up to the lofty promises and visions of its post-war leaders, but worse, its reputation for tolerance and harmony has started to unravel.

The two geographic anchors and arguably most stable societies of South-east Asia — Thailand and Malaysia — are at best receding backwards, and at worse, spiralling towards schisms which, once they tear the social fabric apart, will be hard to repair.

Thailand is not just facing the usual musical chairs of coups, counter-coups, and revolving-door governments. Thaksin’s unprecedented, Latin American style of populism opened up sharp divisions in Thai society which has unfortunately also dragged the previously apolitical monarchy into the fray, albeit still discreetly. Not since the 1970s has Thailand been so fundamentally polarised.

Polarisation is also the common theme running through Malaysian politics. The politics of multiracial accommodation, with its delicate power-sharing between the politically dominant Malays and economically dominant Chinese communities, has, despite abuses and failures, worked well for 50 years. But as with all founding parties, hubris, corruption and complacency has haunted Malaysia’s ruling party.

Like Thailand, Malaysia has not been so fundamentally divided as a society since the tumultuous 1970s. One consolation is that this time round, our financial systems remain relatively robust. But if we succeed as businessmen, it will be in spite of, not because of, the weak, self-serving and divided political leadership in our region.

WALL STREET’S PERVERSE PAY STRUCTURE

The paucity of leadership is something South-east Asia and the US share in common. But whereas both political and corporate leadership are sorely lacking in the US, in Asia there is a genuine, though realistically slim chance, for corporate leaders to show leadership in devising an alternative to the Wall Street ethos.

The globalisation of capitalism in the past half-century has resulted in two major socio-cultural variants. The dominant variant — American capitalism — was built on very high income inequality as the incentive for risk taking and wealth creation. Its flaws were, of course, recently exposed.

As one observer noted, the sub-prime crisis and its aftermath, the humiliating bailout, has done to US leadership in financial markets what Guantanamo Bay and Abu Ghraib has done to the US moral high ground in human rights.

The second variant is Euro-capitalism. The European model of capitalism, influenced by democratic socialist tendencies after World War II, ultimately produced welfare capitalism with its stifling effect on individual initiative and entrepreneurship. It has not been a particularly inspiring alternative to Wall Street as a recipe for becoming a millionaire quickly, but it has at least proven to be less socially disruptive and therefore possibly more sustainable.

But the real issue here is not the survival or even well-being of American-style capitalism. It is whether, after almost 50 years of virtually unchallenged supremacy, American capitalism should be the unquestioned model for a newly resurgent East Asia. And if not, what alternative model can East-Asian thought leaders devise, drawing upon their own history and socio-cultural heritage?

Most commentaries on the source of the current crisis dwell on regulatory failures or excessive risk-taking, but they all fail to situate the analysis within a human context — that it was people who did all these things, and that people always function within a larger socio-cultural context. And people, as any behavioural psychologist will certify, respond strongly to incentives.

Many critics have correctly focused on the perverse pay structure of Wall Street — a highly skewed risk-reward system gone awry — as the root cause of today’s problems.

Perverse and highly inequitable compensation structures are not only morally objectionable, but more importantly, they are the obvious symbols of a society’s value system. And quaint though it may sound, values do matter even in a highly sophisticated financial system.

Successive financial crises have proven one consistent point — regulation by itself cannot prevent excessive speculation or collusive behaviour. Greed fuels any speculative boom and aggravates a bust, but it can only be reined in, not by regulation alone, but by a moral framework, the value system of the entire society, within which business is practiced.

As East Asia emerges as a major economic region, it should not simply adopt the American nor European models, but create its own alternative, rooted in its own, traditional value systems.

The common, recurring socio-ethical tradition of East Asia is its communitarian, family-focused webs of mutual obligations. This communitarian characteristic of East-Asian culture can, if thoughtfully enhanced, nurtured and developed, replace the highly individualistic, Darwinian ethos of American capitalism, or the state-welfarist tendencies of Euro-capitalism.

China and Japan are the two leading examples of neo-Confucian culture. Much of the communitarian ethic of Japan, derided by macho Western critics as overly consensual and conservative, can actually be relearnt by China, which has perhaps in its headlong rush towards wealth imbibed the worst of the American ethic of individualism, and forgotten its Confucian traditions.

Of course, critics will argue that a neo-Confucian capitalism equates to crony capitalism, as the 1997 Asian financial crisis highlighted. They have a point, but the flaws of East-Asian culture do not negate the need to develop a socio-cultural alternative to the Wall Street ethos.

If each of you questioned the fundamental drivers of behaviour within your own organisation and devised a rewards system, which actively promotes communitarian values, we will be moving just that little bit towards a neo-Confucian capitalism.

Instead, it only makes more urgent, the need for East Asian thought leaders to engage in the debate as to what a neo-Confucian capitalism actually means. We need to refine and redefine, neo-Confucian values in our own corporate lives.

What other roles can the financial investment community play in this shift of global economic power Eastwards, to create a sustainable and perhaps more values-based form of capitalism?

OUT OF WORK, LICKING THEIR WOUNDS

To the extent that bankers have been financial intermediaries in any society, they can also be social intermediaries, helping to shape opinions and values. Just as “greed is good” was a Wall Street ethic which insidiously permeated all US consumer behaviour, perhaps our financial services practitioners here can help make “collective is cool”, an alternative ethic for East Asia!

[continued to next post as there is a limit of 10000 characters for each post.]

We dont know who is the real and who is the imposter. But Eagle_2004 posts views which are interesting to read. whereas Eagle2004 just posts words like 'this man is an imposter; that man is an imposter; ignore him.." etc. Pl participate in the discussion and put forth your new views.

hey NELNELNEL,

Stop this non sense lah..dont post too long..i know you are doing a cut and paste job. 'Cos you are not capable of writing one sentence of your own. Dont waste the pages of forum, you idiot.

Not bad.